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Will stimulus help rural Oregon more than urban?

July 22, 2009

The Anti-Stimulus That’s Bigger Than the Stimulus
By Patrick Emerson
Oregon Economics Blog

James Surowiecki of the New Yorker…makes the point I have made many times – without block grants to the states to counter their collapsing revenues, the federal stimulus is simply a weak swimmer against a strong tide. There is one small silver lining he does not emphasize: if we are left with a better infrastructure, this will, in some small way, aid the recovery.

The most interesting part of the article to me is this bit:

“Much of the tens of billions of dollars that will be spent on roads, for instance, will be funnelled through the states. As a result, a disproportionate amount of the money will be spent in rural areas (which exert disproportionate influence on state governments), leaving cities—which happen to have most of the people and most of the traffic—shortchanged. The top eighty-five metropolitan areas in the country are responsible for about three-quarters of the country’s G.D.P. Yet less than half of the road money will be invested there.

I have an economist friend whose pet peeve is all the ways we, as a country, subsidize rural living – no doubt this will displease him. But I wonder, goods have to get from metro area to metro area, so don’t they often travel through rural areas? I am not sure a comparison of GDP is the right metric here. I am not convinced that rural stretches of interstate are less important than urban stretches.

By Patrick Emerson
Oregon Economics Blog

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Alice July 22, 2009

Traffic does indeed go through rural areas to get from metro to metro; and some sections of our major (so-called “rural”) Interstates are in serious stages of disrepair. They are enough to “un-stimulate” my car’s condition!

Shaun August 12, 2009

Patrick, you rightly discern the flaw in using GDP as a measure for who – rural or urban – wins out in the dispersion of stimulus funds. The Rural Yonder recently ran an article calling out the New York Times’ flawed methodology on this very subject (in the article you quoted):

One could argue rural living is subsidized to the extent that agribusiness is heavily subsidized (an historical process which has in fact driven millions of families from their farms and into the cities). But that actually suggests that it is the urban areas which benefit most from these subsidies, as most of the subsidized agricultural product is consumed there.

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